CONSUMER TRANSACTIONS WITH STATUTORY CONTRACT CANCELLATION RIGHTS

There are a number of laws that give consumers the right to cancel contracts in specific transactions shortly after the consumer signs a contract.

A consumer-buyer can cancel these contracts for any reason (or for no reason). To cancel, the buyer must send the seller written notice of cancellation within the period allowed by statute. (Most cancellation periods begin when the consumer receives written notification of his or her right to cancel). The buyer must sign and date the cancellation notice, and it must state that the buyer is canceling the contract. The buyer should send the notice to the seller by certified mail return receipt requested, at the seller's address given in the sale documents. The buyer should keep a copy of the notice for his or her own records as proof written notice was given.

Generally, the buyer's notice of cancellation is effective when it is deposited in the mail with the proper address and postage. The buyer should note the exact date, time, and place of mailing on the retained copy.

Note that some cancellation periods are measured in business days. A list of these transactions and the periods allowed for canceling them follows:

A

Automobile Sales and Leases -- There is no statutory cancellation period for automobile sales or leases.

V. Vocational School Courses -- five business day cancellation period (Ed. Code 94867(a)(1), 94868).

W. Water Treatment Devices -- three business day cancellation period (B&P 17577.3).

Weight-loss Services -- three business day cancellation period (CC 1694.6).

<pThe consumer may also have other cancellation rights. Almost any consumer contract entered into in a consumer's home (or somewhere other than the sellers place of business) can be canceled by sending a written notice of cancellation to the seller by midnight of the third business day after the consumer signs the contract. The contract must be for consumer goods costing $25 or more. (CC §§ 1689-1689.12.)</p>

IIGENERAL CONTRACT CANCELLATION RIGHTS

A buyer also may be able to cancel a contract if his or her consent to it was obtained by the seller's fraud or misrepresentation, or if the bargain fails in some major respect through no fault of the buyer. The buyer should contact an attorney or other expert if the buyer thinks that he or she may have one of these grounds for canceling a contract.

Rescission for Fraud, Mistake, Undue Influence, Breach, Illegality

1. If the buyer's consent to a contract was induced by the seller's fraud, or was given by mistake, or under duress, menace or undue influence, the buyer can elect to rescind the contract (CC 1689(b)).

2. A buyer has a right to rescind a contract when the exchange that the buyer anticipated receiving from the seller "fails, in whole or in part, through the fault" of the seller (CC 1689(b)(2)).

3. The buyer has a right to rescind a contract when the exchange the seller promised to the buyer "becomes entirely void from any cause" (CC 1689(b)(3)).

4. The buyer has a right to rescind a contract when the exchange which the buyer bargained to receive from the seller "fails in a material respect from any cause" before it is rendered to the buyer (CC 1689(b)(4)).

5. The buyer has a right to rescind a contract when the contract "is unlawful for causes which do not appear in its terms or conditions, and the parties are not equally at fault" (CC 1689(b)(5)).

6. The buyer has a right to rescind a contract if "the public interest will be prejudiced by permitting the contract to stand" (CC 1689(b)(6)).

7. A procedure for exercising the right to rescind (which includes a notice of rescission to the other party) is established by law (CC 1691-1693).

8. The provisions on rescission, at CC 1689-1693, also apply when the right to rescind is conferred under another statute (CC 1689(b)(7)).

California Unconscionability Law

1. A court has the power to refuse to enforce a contract or a clause in a contract that is unconscionable when made (CC 1670.5(a), 1770(s)).

2. To enable the court to decide whether a contract or clause is unconscionable, the parties may present evidence of the setting, purpose and effect of the contract (CC 1670.5(b)).

IIICANCELLATION FOR BREACH OF WARRANTY

* Rejection. Buyer may reject a non-conforming product, and, if the seller does not cure the breach, buyer may cancel the purchase (Com. Code 2601, 2711(1))

.

* Revocation of Acceptance. Buyer may revoke acceptance of accepted goods, if they substantially fail to conform to the contract, and may cancel the purchase (Com. Code 2608, 2711(1)).

* Lemon Law. If a warranted product cannot be repaired after a reasonable number of repair attempts, the warrantor must either replace the defective product or reimburse its price, less the amount attributable to use (CC 1793.2(d), 1793.22(b)).

This publication is available on the Internet. See the Department of Consumer Affairs' home page at [HTTP://WWW.DCA.CA.GOV/ www.dca.ca.gov].

This document may be copied, if all of the following conditions are met: the meaning of the copied text is not changed; credit is given to the Department of Consumer Affairs; and all copies are distributed free of charge.

Department Publications: None are offered by the Consumer Information Center